Is Your Business Budget Still Working For You?

Most business owners create a budget once, feel good about it and then don’t look at it again until the following year. But, if you’re not reviewing your budget regularly, it may not be working as well as you think. Business isn’t static, prices change, revenue shifts, expenses creep in, and unexpected things pop up.  So your budget needs to adjust with you.  Here’s how to check if your budget is still working and to do if it’s not.

To check if your business budget is still working for you, you’ll want to evaluate both your financial performance and how well your budget supports your current goals. Here’s a practical step-by-step process you can follow:

✅ 1. Compare Budgeted vs. Actual Figures for the last 3-6 months

• Pull financial reports (e.g. income statement, expense report).

• Look at key categories: revenue, cost of goods sold (COGS), operating expenses, profit.

• Ask: Are you over or under in any key areas?

Example:  You budgeted $200/month for software but are actually spending $325. Or you expected to earn $8,000/month in revenue in a particular service category but you are averaging closer to $5,500.  These are clues that you may need an adjustment to your budgeted numbers.

✅ 2. Check Cash Flow Health

• A good budget helps maintain healthy cash flow.

• Review your cash flow statement: Are you consistently in the black, or dipping into reserves?

• If you’re profitable but cash-poor, your budget may be ignoring timing issues (e.g. delayed client payments).

  
  

✅ 3. Assess Business Goals Alignment

• Are you meeting your growth targets, staying on top of debt, or saving for key investments?

• If your goals or business model have changed (e.g. hiring, expansion, market pivot), your budget should reflect those updates.

  
  

✅ 4. Spot Changes in Costs or Income

• Has anything gotten more expensive (e.g., rent, materials, subscriptions)?

• Are you earning more/less than expected?

• Adjust for inflation, supplier rate increases, or client churn.

  
  

✅ 5. Review ROI on Budgeted Items

• Are your marketing campaigns, software tools, or new hires giving you a good return?

• If not, your budget might need reallocating to higher-impact areas.

  
  

✅ 6. Track Trends Over Time

• Look at your budget performance month-over-month or quarter-over-quarter.

• Are issues consistent or one-off? Are you improving or declining?

  
  

✅ 7. Reforecast as Needed

• A working budget is dynamic, not set in stone.

• If major changes have occurred, create a revised budget based on your latest actuals and forecasts.

  
  

🚨 Red Flags Your Budget May No Longer Be Working:

• You’re consistently overspending or under-earning

• You're unsure where your money is going

• Your goals aren’t being funded

• You’re surprised by frequent cash shortages

If your books are not up to date or messy, it will be nearly impossible to review your budget accurately.  Hiring a good bookkeeper can be crucial to successful budgeting.